Offshore Trusts Report: Jersey

Jersey Foundations

In 2009 Jersey became the first Crown Dependency to offer Foundations.

Whilst similar in design to Foundations in other jurisdictions,
the Jersey structure has mandatory requirements for one member on
its council to be licensed as a Qualified Person by the Jersey Financial
Services Commission and for the Foundation to have a ‘guardian’,
who has a duty to supervise the council’s activities. In addition,
the flexibility of the Jersey structure allows it to be tailored
to suit a broad range of needs.

Whilst Jersey is first and foremost a trust jurisdiction, with
many years of experience in the administration of trust structures,
there are many countries in which the trust is an unfamiliar concept.
Consequently the ability to create a more familiar vehicle such
as the Foundation will be of interest to those from areas of the
world where the trust is not well understood, and will likely encourage
more HNWIs to do business with Jersey.

Foundations have a long history in continental Europe.
In medieval times they were used for charitable or religious purposes.
They are now commonly used for wealth management, and residents
of jurisdictions like the Middle and Far East are more familiar
with foundations than with trusts, which do not exist in their legal
systems. Indeed, Mourant du Feu and Jeune, one of Jersey’s
leading law firms, says that clients and advisers from many civil
law jurisdictions, such as China, Russia and some continental European
jurisdictions prefer Foundations because they offer familiarity,
transparency and flexibility, the firm says.

In November 2009, Mourant announced that it had completed a Foundations
related “hat-trick.” Having advised on the first Jersey
Foundation for private beneficiaries and the first Jersey Foundation
for charitable purposes, it also advised Royal Bank of Canada on
the first continuance of a foreign foundation to be registered in
Jersey and to continue its life as a Jersey Foundation.

The continuance came from Liechtenstein and involved a team of
Mourant du Feu & Jeune advisers assisting in the flow of information
between the Jersey and Liechtenstein registrars.

Giles Corbin, head of Mourant du Feu & Jeune’s Trusts
practice, which advises on the structuring and drafting of Foundations,
said:

“A Foundation is a new concept for Jersey and has been welcomed
as a positive step in affirming the Island as a leading jurisdiction
for private wealth management business. Jersey is fast becoming
a jurisdiction of choice for the structuring, drafting and administration
of Foundations because of its OECD white-list status and the expertise
of its advisers and administrators.”

Since Jersey’s Foundations law came into force in July,
making it the first Crown Dependency to offer Foundations, Mourant
du Feu & Jeune has advised on over half of all Jersey Foundations
that have been created.

Alan Binnington, Private Client Director at RBC Wealth Management,
noted that whilst Jersey is first and foremost a trust jurisdiction,
with many years of experience in the administration of trust structures,
there are many countries in which the trust is an unfamiliar concept,
the ability to create a more familiar vehicle such as the Foundation
will be of interest to clients from areas of the world.

“Unlike a trust, which is essentially a relationship between
the trustees and the beneficiaries, rather than a legal entity,
the Foundation has a separate corporate personality, similar to
a company, and this may be more attractive to clients who are uncomfortable
with the trust concept," he said.

Jersey is keen to ensure that its Foundations are subject to the
same regulatory regime as trusts, notes Binnington. “The new
law accordingly contains a requirement that one of the members of
the Council of the Foundation is a regulated person. In addition,
whilst beneficiaries will not have any rights to enforce the council’s
duties, there is a requirement that each foundation has a guardian,
who will hold the council members to account,” he continued.

The text of the Foundations (Jersey) Law 2009 was released for
public viewing following the Privy Council’s approval of the
text in mid-June 2009. A consultation paper setting out the proposed
registration and process fees for foundations was also issued by
Jersey’s Financial Services Commission.

Broad agreement from industry has been obtained via the Foundations
Working Group that fees for foundations should track, where similarities
exist, those currently set for Jersey companies.

In order to be consistent, amendments have been proposed to other
Registry Fees Notices, with respect to searches, to bring them into
line with the proposed search fees for foundations.

Welcoming the Privy Council’s decision in a prior statement,
Economic Development Minister Alan Mclean said: “More than
ever, in these difficult times, we need to do what we can to support
and diversify the island’s Finance Industry. I am pleased
that Jersey is the first of the Crown Dependencies to bring in Foundations,
and we hope this kind of innovation will help to protect and develop
the industry that pays for more than half of Jersey’s essential
services.”

The Foundations (Jersey) Law 2009, entered into force on July 17,
2009.

Jersey News

Guernsey's 10-Year-Old Trusts Law 'Ahead Of Its Time'Friday 23/3/2018Guernsey's trusts law, which came into force 10 years ago, has been described as "ahead of its time" and "a reminder of the jurisdiction's ability to innovate and adapt to changing market conditions" by leading trust and fiduciary lawyer Russell Clark.

Abu Dhabi Tax-Free Zone To Launch FoundationsFriday 2/6/2017Abu Dhabi Global Market, the low-tax international financial center, is seeking feedback on its proposal to allow the formation of "foundations," a trust-like entity widely used in civil law jurisdictions.

Channel Islands Exchange Attracting New ListingsThursday 3/11/2016Steps taken by the Channel Islands Stock Exchange to enhance and diversify its offerings contributed to a 13 percent increase in new business during the first half of the year.

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